First Solar Declines on Concerns Over Panel Reliability

First Solar Inc. (FSLR), the world’s biggest
maker of thin-film panels, fell the most in five weeks after the
company said as many as 232,000 panels in the field may need to
be replaced.

First Solar declined 11 percent to $20.07 at the close in
New York, the most since Aug. 30.

The panels, made between October 2008 and June 2009, “may
over time develop a loose cord-plate attachment,” Ted Meyer, a
company spokesman, said today in an e-mail.

The company is working with owners to repair or replace the
affected panels and will replace roof-mounted units at no cost,
he said. The issue isn’t expected to have a “significant
impact” on earnings because it was included in financial
guidance released in August, he said.

Solar panels with loose cord plates put at risk the units’
wiring, increasing the risk of electric shocks and fires, Mark Bachman, an analyst at Avian Securities Inc. in Boston, said in
an interview. Bachman downgraded the shares to the equivalent of
sell from buy today and removed his 12-month price target.

“Clearly, it calls into question the manufacturing process
First Solar has,” Bachman said. “Some of those modules that
have this problem may have already been replaced, but where this
is a big concern is with the European installers who were
putting them on rooftops.”

First Solar has had other mechanical issues. It reported a
$164 million charge in February for warranty payments related to
flawed panels that may have premature power losses.

“It’s the second time that something’s gone wrong,”
Bachman said. “First Solar is going to have to communicate that
they don’t have any issues going forward. Investors are going to
want to know, ‘What’s the third issue going to be?’”